What’s at stake in 2008?

An unpopular Republican governor, an increasingly deep economic funk, and a national outlook that nearly all prognosticators say greatly favors their party.                         

Nevada Democrats couldn't have come up with a better storyline heading into the 2008 elections if they'd been allowed to write the script themselves.

When Silver State voters head to the polls for the Nov. 4 general election (the primary is Aug. 12), they'll cast votes in 10 state Senate races and 42 Assembly contests that will determine the makeup of the 2009 state Legislature.  Also in the balance, most likely, is the direction Nevada public policy will take over the next couple years (and possibly beyond). That's particularly true on taxes and fiscal issues, as concerns over a large state budget deficit are fueling both angst among voters and pressure on elected officials.

At first glance, it's hard to blame Democrats for being optimistic about their November chances.  Nevada's Republican governor, Jim Gibbons, is mired in low approval numbers (21 percent, according to a mid-June poll), and though neither he nor the state's other constitutional officers are on the ballot this fall, Democrats are confident Gibbons' unpopularity will provide a significant boost to their candidates.

"We're looking at a very good year for legislative races," said Kirsten Searer, deputy executive director of the state Democratic Party. "Given the climate in Nevada, not only are Democrats on an uptick in voter registration, but the Republican brand has suffered a terrible blow due to the dismal leadership of our governor."

Zachary Moyle, executive director of the state Republican Party, is fully aware that the political climate – not just in Nevada, but across the nation – poses an extra challenge to his party's candidates.  But he's confident in the strategy Republicans have in place for campaigning in such an environment.

"The simple explanation is we do it locally," Moyle said.  "In Nevada, politics has always been a local issue.  We'll try as much as possible to take it back to local issues."

It would seem Moyle's party faces a steep uphill climb this year, given all of the factors working against it.  However, despite the party's nationwide unpopularity, the reality is that Nevada Republicans may actually be pretty well positioned to avoid major damage, at least in terms of sheer numbers.  While 2008 is likely to be a watershed year nationally – a new president, plus potentially massive gains by the Democrats in Congress – a dearth of truly competitive races in Nevada, thanks to redistricting, means any legislative gains, by either party, are likely to be small.

"The beauty of redistricting is that it really narrows the playing field to just a few of these districts," said David Damore, an associate professor of political science at the University of Nevada, Las Vegas.

There's another reason Republicans, at least in the Assembly, are unlikely to suffer significant defeats:  They've got very little to lose.  Of the state's 42 assemblymen, 27 are Democrats and just 15 are Republicans.  Given those numbers, Republicans may actually be poised for gains – albeit modest – in that chamber.  Even some Democrats acknowledge their own party has little room for growth.

"Democrats are clearly going to hold the majority," said Democratic consultant Gary Gray.  "But when you get up to that number, you're getting into rarefied air.  There are a couple seats that may be in play."

The bottom line is that, barring a political earthquake between now and November, the 2008 elections are unlikely to produce a significant change in the Assembly's makeup.  The Democrats' majority is huge today, and it will be huge tomorrow (though there is the question of whether they'll net the one seat they need to obtain supermajority status).

The real action, then, will be in the state Senate races.  Republicans cling to a one-seat majority in that chamber, so a shift in just one seat would alter the balance of power in the Senate and put both legislative houses under Democratic control.  And because no Democratic senators appear vulnerable this year, Republicans are unlikely to find any seats to pick up as a way of offsetting a potential loss.  For Senate Republicans, then, there is literally no room for error.

With that as the backdrop, most of Nevada's political observers come Election Day will be focused on what is shaping up to be Ground Zero for the entire 2008 legislative election battle:  Senate District 6 in Clark County, where Republican incumbent Bob Beers will try to stave off a challenge from likely Democratic foe Allison Copening.  Beers is widely seen as the most vulnerable Senate incumbent, largely because of the district's near-even split in partisan registration.  Additionally, some believe Beers' high profile and his famously consistent opposition to tax increases – attributes that often work to his advantage – may actually prove detrimental in Nevada's current economic climate.

"Beers can be a divisive figure," said Eric Herzik, a professor and chair of the Department of Political Science at the University of Nevada, Reno.  "He's certainly linked to the anti-tax policy stance, and whether or not the state's economic downturn hurts him remains to be seen. I think this is an incredibly tough race to call."

Democrats, smelling blood, are indeed focusing much of their efforts on Beers.  They've also targeted Clark County Senate District 5, where Shirley Breeden is the likely challenger to Republican incumbent Joe Heck.  Searer, who calls Beers a "Gibbons apologist," said the numbers look good for Democrats in both races.  But since Heck is generally viewed as the safer of the two incumbents, and because no other Republican seats appear vulnerable, a Copening victory over Beers seems the Democrats' most likely path to a Senate majority.  Can she pull it off?

"Certainly, Democrats would like to put that prize on their wall," Damore said.  But Damore, like Herzik, expects Beers ultimately to hold on.     

Republicans had better hope he does, as a Beers defeat would be significant for multiple reasons.  There is, of course, the psychological impact it would carry – "a true blow to the most conservative wing of the Republican Party," as Herzik puts it – but more important is the way it would reshape the political landscape heading into the 2009 Session, where fiscal issues are certain to take center stage.

As Nevada's current economic slump has dried up government revenues, Gibbons has come under fire from many Democrats for refusing to back down from his no-new-taxes pledge.  Gibbons was able to survive a Special Session in late June without having to budge (the shortfall was addressed mostly through spending reductions), but it remains to be seen whether he'll be as fortunate next year.

Losing Beers as an ally won't help.

"[Beers] knows this budget better than anyone else I can imagine in this state," said Republican consultant Robert Uithoven.  "If we were to lose Senator Beers from the Senate, it would have a huge impact on the fiscal affairs of this state.  I think we would see higher taxes to fund larger, more intrusive government.  Even if the power in the Senate didn't hinge on this race, having Senator Beers there as part of a Republican majority is just as important."

Of course, the balance of power in the Senate does hinge on the Beers-Copening race, and should Democrats capture the Senate, the impact on Silver State policy could indeed be profound.

Uithoven, for one, has little doubt that a Democratic Party in control of both legislative houses would push for tax increases as the solution to the state's economic problems.  He said references to a need to "ensure predictable revenue" and "fully examine our financial structure," as Assembly Speaker Barbara Buckley put it in a pre-Special Session address, are an attempt to avoid calling tax hikes by their name.

"Any time a Democrat has gone out and promised an overhaul of the tax code in the state, it has led to massive tax increases," Uithoven said.  "We all know what it means.  Businesses in this state know what it means.  We've been through this before."

While Democrats generally stop short of outright calling for tax increases, or of citing specific areas where they think taxes should be raised, they have been consistent in arguing Nevada's current approach to fiscal affairs isn't working.

"All our Democratic leaders are saying right now is that we have a financial structure in our state that's not working, and we have a financial crisis every few years, so obviously, something is not working here," said Searer, who added that attempts to address revenue shortfalls should include an examination of government spending.  "Our leaders haven't really put out the solution for 2009 yet.  They're talking to people about what is best for the state.  Speaker Buckley is consulting with a wide variety of experts as to what we should do."

Still, the consensus among independent observers seems to be that in all likelihood, the Democratic agenda for 2009 will include tax increases of some kind.  How successful they will be in implementing that agenda is harder to predict.  After all, they'll still be going up against a governor who has remained steadfast in opposing tax hikes as a way of addressing revenue shortfalls.

And assuming Gibbons isn't inclined to change that position, it would appear he'd enter the '09 Session, at least theoretically, from a position of strength, even if Democrats do take over the Senate.  That's because of a constitutional provision, authored by Gibbons himself (while a state legislator in the 1990s), that requires two-thirds approval of both legislative houses for any new taxes to take effect.  Even under their rosiest scenario, Democrats won't come close to that large a majority in the Senate.  So does it really matter whether Democrats are in the majority?

It very well may.  To get any tax increases through, majority or not, Senate Democrats will need to find enough Republicans to break ranks in order to meet the two-thirds requirement, a script for which there is precedent (the 2003 Session being perhaps the most memorable case).  And Republicans might find it harder to stand with Gibbons if the Senate is in Democrats' hands.

"It makes it easier for the Democrats if they get both [houses]," Damore said.  "It makes their job a little bit easier.  The two-thirds majority [rule] makes it tough [to raise taxes], but if they can patch together a bipartisan plan, you can make the governor sort of an afterthought on that."

Herzik, however, has a warning for Democrats in the event they do control both chambers come 2009.

"Be careful what you wish for," Herzik said.  "If Democrats control both houses, it's going to be very hard to duck behind and blame the governor for not addressing tax policy.  If Democrats control both, there will be more pressure to come up with a plan that would probably include tax increases."

Such a plan, if presented for what it is, can be politically risky, Herzik said.

"‘Changing the tax structure' will become the code words," he said.  "Nobody wants to get out in front on new taxes.  They will try to find phrases that mean tax increases."

But Democrats may have boxed themselves in on the tax issue.  Given their criticism of Gibbons' opposition to new taxes, the pressure, Herzik said, will be on Democrats to offer an alternative.

"If they have the majority and don't come forward with some kind of tax plan and try to blame it all on the governor," he said, "sooner or later the public will say, ‘Wait a minute: What's your plan?'"

If Democrats do call for tax increases, said Gray, "I don't think they are going to be any of the sorts of taxes that would affect middle-class families. If there are any, it will be some to stabilize taxation, and stabilize the state's budget."

But Uithoven sees real trouble ahead for taxpayers, particularly businesses, if Democrats get their way.

"Businesses right now need to start paying very close attention to what the makeup of the Legislature will be," Uithoven said.  "Businesses today need to be asking candidates and incumbents, 'Do you believe the course of action in the next Legislative Session should be raising taxes?  Or do we make government do what businesses and families do, and that's live within its means?'"

Andy Matthews is vice president for communications at the Nevada Policy Research Institute. This commentary was first published in the August 2008 issue of the Nevada Business Journal.